S&P: Goodyear Tire notes BB

S&P said it assigned a BB rating and 4 recovery rating to the Goodyear Tire & Rubber Co.’s proposed $900 million senior unsecured notes.

The 4 recovery rating indicates 30% to 50% expected default recovery.

The proceeds will be used to fully redeem its 6˝% senior notes due 2021 at a redemption price equal to 104.875% of the principal, plus accrued and unpaid interest up to the redemption date, S&P said.

The proposed notes are senior unsecured obligations of Goodyear and its guarantors, ranking equal in right of payment with the company’s existing and future unsubordinated debt, the agency said.

The notes also will be effectively subordinated to all debt held by the company and its subsidiary guarantors, S&P said.

The ratings reflect the company’s high leverage and substantial competition in both the replacement and original equipment tire markets, the agency said.

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